(MENAFN- Daily Forex) Bullish view
Buy the AUD/USD pair and set a take-profit at 0.6715. Add a stop-loss at 0.6600. Timeline: 1-2 days.
Bearish view
Sell the AUD/USD pair and set a take-profit at 0.6600. Add a stop-loss at 0.6715.
The AUD/USD
exchange rate continued its strong rally even as key Australian
commodities continued falling. It rose to the multi-week high of 0.6670, up by over 50% from its lowest level this month ore crash continues
The Australian dollar continued rallying even as iron ore, the country's top export, continued falling. It dropped to $92 on Monday, its lowest level since 2022 and has retreated by almost 10% in the past few days.
The main reason for the surge is that output from key countries, including Australia has been rising in the past few months. At the same time, inventories in China, the biggest importer, have continued rising.
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China's steel sector is suffering as demand from the construction sector remains soft. Last week, a report by the statistics agency showed that house prices dropped by 4.9% in July after falling by 4.5% in the previous month.
The AUD/USD pair also rose after the mixed Australian jobs data. According to the Bureau of Statistics (ABS), the economy added over 58.2k jobs in August, higher than the median estimate of 20.2k. Labor participation rate rose to 67.1% while inflation expectations rose to 4.5%.
Therefore, there are signs that the Reserve Bank of Australia (RBA) will be one of the last major central banks to start cutting interest rates. In recent statements, the bank's central bank governor, Michele Bullock, has maintained that she was ready to hike rates again if inflation remains steady.
On the other hand, the Federal Reserve is expected to start cutting interest rates in September since inflation has moved downward in the past few months.
The AUD/USD pair will have muted price action this week, with no major economic data scheduled to happen. The only event to watch will be Wednesday's Fed's minutes/USD technical analysis
The AUD/USD exchange rate bottomed at 0.6350 earlier this month and has bounced back by over 5% to 0.6670, its highest point since July 22. This rebound happened after the pair formed a hammer pattern, which is characterized by a long lower shadow and a small body.
The pair has risen above the 50-day and 25-day moving averages, meaning that bulls are in control. Also, the Average Directional Index (ADX) has risen to 30 while the Awesome Oscillator has turned green and is nearing the neutral point.
Therefore, the path of the least resistance is upwards, with the next point to watch being at 0.6715, its highest swing on May 16.
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